The Pound US Dollar (GBP/USD) exchange rate slipped to a nine-day low on Wednesday as investors adjusted positions in end-of-year trade.
Pound to Dollar (GBP/USD): 1.34497 (-0.13%)
Euro to Dollar (EUR/USD): 1.17347 (-0.1%)
Dollar to Japanese Yen (USD/JPY): 156.8115 (+0.28%)
DAILY RECAP:
After strengthening on Tuesday, the US Dollar (USD) extended its gains into the final session of 2025 as investors repositioned ahead of year-end.
The ‘Greenback’ endured a difficult year, with losses approaching 10%, prompting some bargain-hunting as traders squared books into the close.
USD sentiment was also supported by the Federal Reserve’s December meeting minutes, which revealed a more nuanced debate around policy easing and suggested rates could be held steady near-term until clearer evidence of slowing inflation or rising unemployment emerges.
Meanwhile, the Pound (GBP) struggled to gain traction as risk appetite moderated.
Although equity markets had posted fresh highs earlier in the week, momentum faded, leaving the increasingly risk-sensitive Pound exposed.
A lack of UK economic data further limited support for Sterling, allowing the Dollar to retain the upper hand.
Near-Term GBP/USD Forecast: Manufacturing PMIs to Set the Tone?
Looking ahead, markets reopen on Friday with the release of the finalised manufacturing PMIs for both the UK and the US.
Preliminary figures showed British factory activity picked up in December. Confirmation of this could offer Sterling modest support, though gains may be limited given manufacturing’s relatively small share of the UK economy.
In contrast, the US PMI is expected to show slowing factory activity, which could weigh slightly on the US Dollar.
Beyond data, risk appetite may prove decisive. A cheerful start to the new year could favour the Pound, while renewed caution may see the safe-haven Dollar regain ground.
